Government bonds

The average stockmarket investor had a miserable year in 2008. By contrast, holders of government bonds did rather well, as falling interest rates lifted prices. Bonds that started the year with the highest yields had most scope for capital gains. That helps to explain why the return on Australian bonds was the highest in the 13 rich countries making up JPMorgan's global bond index. Short-term interest rates were also slashed in Britain and America, driving long-term rates down and bond prices up. Sovereign-bond investors in Japan, where interest rates were already low, did worst in local-currency terms. In dollar terms, however, Japan was the best performer in the index, thanks to the rising yen.